Quanta Services, Inc.'s (PWR) subsidiary, PAR Electrical Contractors, Inc., has reached a settlement deal with San Diego Gas and Electric or SDG&E, a division of Sempra Energy (SRE), relating to an outstanding change order dispute associated with work performed by PAR for SDG&E's Sunrise Powerlink Transmission Line Project, which was completed in 2012. Both the parties agreed that PAR would receive $65 million in cash from SDG&E, representing the final amount to compensate PAR for substantially all of the unpaid portion of its costs incurred on the project.
SDG&E's chief executive stated, "Quanta and SDG&E are pleased to have this matter behind us and are excited about the opportunity to work together again. Quanta has been an integral part of our infrastructure development activities throughout the past 15 years. We look forward to the opportunity to work with them on future projects."
As a result of the agreement, Quanta expects to recognize an estimated $50 million charge or about $31 million net of tax to provision for long-term contract receivable in the fourth quarter of 2014. The estimated net impact of this provision on Quanta's results for the fourth quarter is an after tax reduction of about $0.14 per share.
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